In line with the CFPB’s and FTC’s recent scrutiny of big tech companies, Senator Amy Klobuchar (D-MN) introduced the American Innovation and Choice Online Act¹ (AICO Act) on October 18, 2021. The bill is co-sponsored by Sen. Chuck Grassley (R-IA) and a number of other bipartisan supporters and was assigned to the Senate Judiciary Committee. The AICO Act is proposed antitrust legislation aimed at preventing operators of the largest online platforms involved in ecommerce from engaging in preferential or exclusionary conduct intended to promote their own products and services at the expense or exclusion of third party businesses.

The AICO Act, if passed by Congress and signed into law, would prohibit an operator of a “covered platform” from, among other things:

• Giving unfair preference to its own products, services and lines of business over those of another business on the covered platform, including with respect to search results on the platform and access to the platform and its functionality;
• Unfairly limiting the ability of another business to compete on the covered platform relative to the operator’s own products and services offered through the platform;
• Requiring a business to purchase or use other products or services of the platform operator as a condition to getting access to the covered platform or to preferred access or placement on the covered platform;
• Using non-public data obtained or generated on the covered platform from activities of another business to offer the platform operator’s own competing products or services; 
• Restricting a business from accessing data generated from its activities on the platform, including by restricting the ability of such business to port its data to another platform; and
• Discriminating in the application of the covered platform’s terms of service in a manner that materially harms competition on the platform.

The “covered platforms” that would be subject to the Act, if passed, are to be designated and published in the Federal Register by the Federal Trade Commission and Department of Justice, acting in concurrence. An online platform would be eligible to be designated a “covered platform” by the FTC and DOJ if (1) it has at least 50 million active monthly U.S. users or 100,000 active monthly U.S. business users, (2) is (or in the prior 2 years has been) owned or controlled by a business with net annual sales in the U.S. or market capitalization that exceeds $550 billion (subject to a CPI-based inflation adjustment), and (3) is a critical trading partner for the sale or provision of products or services on the online platform (meaning it can restrict another business from access to its customers or access to tools that it needs to effectively serve its customers). A designation of a covered platform would remain in effect for seven years even if there is a change in ownership or control of the covered platform, unless the FTC or DOJ affirmatively removes the designation.

The proposed AICO Act includes several affirmative defenses that covered platform operators can assert with respect to activities that would otherwise violate the Act’s prohibitions. These defenses include that the operator’s activities are narrowly tailored to avoid violations of law, protect user safety, privacy or data, or maintain or enhance core functionality of the covered platform.  

The AICO Act would allow enforcement by the FTC, DOJ, and State attorneys general. Remedies for violations of the AICO Act would include civil penalties in amounts up to 15% of the total U.S. revenue of the operator of the covered platform, injunctions to prevent violations of the Act, and in the case of repeat offenders, potentially requiring the platform operator’s CEO and other relevant corporate officers to forfeit to the U.S. Treasury 12 months’ worth of compensation received by them. 

The big tech industry is pushing back on the bill and has raised concerns related to innovation, security, privacy, and quality of services and ability to continue to offer certain customer benefits, such as next-day or 2-day shipping. Big tech companies have also raised concerns that the proposed AICO Act could result in increased security and fraud risk by restricting how platform operators can police who operates on their marketplaces and app stores and by requiring sharing of data. Other concerns raised include the inability to control the quality of search results, stifling innovation (such as the ability of the tech companies to launch new features or link interrelated services in a way that the they would not be willing to do with third party businesses), the fact that the Act would only apply to U.S. platforms and not foreign-based platforms, and hampering U.S. companies’ ability to remain competitive in the global tech industry. The proposed AICO Act was debated at the Senate Judiciary Committee on January 20, 2022 where it was noted that Senators have proposed over 100 amendments, some of which are designed to address these stakeholder concerns.

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1 S. 2992, 117th Cong. (2021).

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